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Winnipeg's budget, recycled

Bowman has failed to learn the lessons of the past

Council's finance chairman, Marty Morantz, and Mayor Brian Bowman field questions after releasing their first budget.

RUTH BONNEVILLE / WINNIPEG FREE PRESS FILES

Council's finance chairman, Marty Morantz, and Mayor Brian Bowman field questions after releasing their first budget. Purchase Photo Print

Now that the Bowman administration has finished its ritual self-congratulation after the passage of its first budget, it's time for the real work to begin. That may sound odd after all the speeches about how "tough" the budget was. But in truth, the 2015 city budget took the easy way out on too many fronts, building on many Katz-administration mistakes.

Recycled: Mayor Sam Katz's 2011 ploy of looting the waterworks utility for "dividends." Some 12 per cent of your water bill is now a hidden city tax, up from Katz's eight per cent. Every dime poached limits the water and waste department's room to fix its own repair backlog in an era of brown water and frozen pipes. Still, it's easier to take $10.7 million more from water ratepayers than it is for Mayor Brian Bowman to admit he campaigned on a reckless tax promise.

Reheated: The 2015 budget repeats Katz's mistake of issuing small-business tax credits. Winnipeg is now one of only two major cities left in Canada with a separate business tax. Calgary is already halfway through its plan to merge its business tax away since I last raised this issue in the Free Press three years ago. Most cities have folded their business taxes into the general commercial property tax.

Levying a separate business tax costs real money through separate assessments and appeals. And every new dollar of small-business tax credit makes it harder to merge the business tax away -- but council keeps piling it on, choosing headlines today over investor friendliness and administrative savings tomorrow.

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Hey there, time traveller!
This article was published 30/3/2015 (906 days ago), so information in it may no longer be current.

Now that the Bowman administration has finished its ritual self-congratulation after the passage of its first budget, it's time for the real work to begin. That may sound odd after all the speeches about how "tough" the budget was. But in truth, the 2015 city budget took the easy way out on too many fronts, building on many Katz-administration mistakes.

Recycled: Mayor Sam Katz's 2011 ploy of looting the waterworks utility for "dividends." Some 12 per cent of your water bill is now a hidden city tax, up from Katz's eight per cent. Every dime poached limits the water and waste department's room to fix its own repair backlog in an era of brown water and frozen pipes. Still, it's easier to take $10.7 million more from water ratepayers than it is for Mayor Brian Bowman to admit he campaigned on a reckless tax promise.

Reheated: The 2015 budget repeats Katz's mistake of issuing small-business tax credits. Winnipeg is now one of only two major cities left in Canada with a separate business tax. Calgary is already halfway through its plan to merge its business tax away since I last raised this issue in the Free Press three years ago. Most cities have folded their business taxes into the general commercial property tax.

Levying a separate business tax costs real money through separate assessments and appeals. And every new dollar of small-business tax credit makes it harder to merge the business tax away — but council keeps piling it on, choosing headlines today over investor friendliness and administrative savings tomorrow.

Also reheated: IOU notes. This budget was balanced with almost $3 million in an "expenditure-management account" that represents unspecified future savings. Mea culpa: As Katz's budget adviser in 2006, I pushed for a similar target myself. Luckily, managers covered the gap by holding more vacant job postings open — but that will be tough in 2015 since the budget already budgets to get new savings from the same tactic.

Refried: Bowman copied Katz when he tried to downplay his frontage-levy increase. He should have been out selling it ahead of the budget. Both mayors claimed frontage-levy increases weren't property tax increases. They surely are, in spirit.

However, by law, frontage levies must be dedicated to infrastructure. Better yet, frontage rates are fixed, so they won't grow with unexpected changes in home values. This matters to lower-income North End taxpayers, since they recently got whacked by above-average increases in area home values. However, thanks to the mayor's budget-day dodging, few residents will be aware of either benefit.

There are alternatives. For example, the budget's cover letter took a shot at Katz and former mayor Glen Murray: "In the past, our city relied heavily on non-recurring, one-time revenues to sustain 14 years of property tax cuts and freezes, contributing to a projected $73.4-million structural deficit... in 2016."

Yet the 2015 budget also relies on one-time revenues: $9 million from the fiscal-stabilization reserve; $0.9 million from the general-purpose reserve; over $3 million from two insurance reserves and so on. Council even revised one reserve's target threshold down to make it easier to plunder it in the future. Councillors could use reserve dollars to finance long-term savings instead; simply offer one-time buyouts to retire senior police and firefighters earning peak salaries, then replace them with younger, cheaper and fitter recruits to maintain service levels.

Elsewhere, Bowman's odd faith in across-the-board cuts meant council debated service cuts that shouldn't have even been on the table — such as $700,000 in reduced street cleaning. Hunting top-down for savings would have been more sensible. For example, instead of hiring two new clerks (worth $207,000) to process freedom-of-information requests, why not just publish more information without waiting for requests? And isn't it time to cut the suddenly vacant (and totally unnecessary) chief operating officer post, worth at least $200,000 in total compensation?

Bowman's team could also have learned from Clark County, Nevada or Hamilton, Ont. Each cut their respective firefighter overtime budgets by over a third within a year, with no service impacts, simply by attacking staff manipulation of sick leave and overtime rules. Or: cut Winnipeg's wasteful inventory of parking stalls and staff vehicles by partnering with car-share companies as many U.S. cities have. And so on.

At the press conference announcing the 2015 budget, rookie Coun. Marty Morantz said he was surprised to learn how previous budgets got balanced at city hall. Ironically, as council's finance chairman, he'd just tabled a plan built on the same unsustainable tactics minutes before.

If Bowman, Morantz and their colleagues really want to change that, it's time to put the pom-poms aside. Stop talking about the 2015 budget as if it was a success. Start seeing it as the smoke alarm it actually was.

 

Brian Kelcey is a public affairs consultant who served as mayor Sam Katz's budget adviser from 2005-2008. Early in the budget process, Kelcey discussed working with the Bowman administration on potential budget solutions.

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History

Updated on Monday, March 30, 2015 at 7:22 AM CDT: Adds photo

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